Steps to Take To Keep America Solvent; It Won’t Take Very Long to Accomplish

Health Care Reform is done…mostly.  As with any Federal program, I’m sure there will be fixes required over time, but at the very least, a foundation and the first floor have been built.  Now it’s time for this President to clean up the clusterfuck that is the Federal Government, including all of  its programs, and the National Debt.  Here is a list of things that need to be done if our nation is to earn the entitlements we have given ourselves through Social Security, Medicare, and Health Care Reform. It all starts with:

Balance the Budget and pay OFF the National Debt. The link I provided above takes you to a page that shows some of the many Federal Programs now in existence.  This is by no means a complete list.  There are programs within programs within programs, each with its hands in the cookie jar.  It’s time to streamline this mess, and cut the bureaucracy.  Our Budget Deficit is slated to be $1.6 Trillion this year with a projected $2.2 Trillion tax revenue.  That means our deficit is 75% of our expected income.  You don’t need to be a math wizard to see how this adds up and where it takes us.

The mandatory spending, which totals  $2.184 trillion, allocates $695 billion to social security, $453 billion to Medicare, $290 billion to Medicaid, $11 billion in a potential disaster relief fund, $164 billion to pay off interest on the national debt and the remaining $571 billion to miscellaneous expenses.  How do we balance a budget amidst this mess?

a.)  Begin a program of cutting a minimum of ten percent from every single Federal Program, across the board.  Demand it as a prerequisite for receiving ANY Federal money at all.  Government bureaucrats hair will start on fire, but this is not only possible, it’s necessary.  We have the talent in government to pull this off; the only thing lacking is the will to do it. and the will to enforce it  After the first cut, freeze spending for two more years to create a decent surplus.  If you look at that list in the link I provided, there is no way anyone can honestly tell me we can’t afford to cut $380 Billion out of our budget without suffering.  The ten percent cut will be the easiest of our solutions.

b.)  Cut Social Security payments to 75% of expected levels for anyone under the age of fifty-five.  Let’s not kid ourselves, we can’t afford to keep the payments as high as they are now; cutting future payments is only one step toward solving this huge problem.  Politicians believe we should increase the age of retirement, which makes sense on the surface, until you realize that the longer Seniors work, the less jobs there are available for younger people, creating an unemployment nightmare for years to come.  Is it feasible to make people work longer?  Yes.  Is it wise? Probably not.  Not unless you want to create a continuous cycle of 10% unemployment, which creates all sorts of other entitlement problems like  welfare and unemployment compensation.

c.)  Raise taxes on the top earners back to 50% above $500,000 earned income (the 50% level is the level that the Reagan Administration felt most comfortable with), and include Capital Gains as earned income for businesses and individuals who earn their living through Capital Gains.  Reduce Capital Gains taxes to five percent for any retired Senior Citizen who earns less than $100,000 in Capital Gains (an effort to make up for lost SS wages), and ten percent for any citizen who earns less than $100,000 per year.  Republicans will scream bloody murder, but they are the Party that started us down this twisted mess of a road, constantly reducing taxes without any means of replacing tax revenue that was lost, or without forethought to the money that would leave American shores as the result of foreign investments.  I talked about this in a previous post.  Business owners and wealthy Americans need an incentive to invest in America, and the only way to do that is to threaten them with punitive taxes when they don’t.   Raising taxes to these levels would pay for approximately $1.2 Trillion dollars per year of deficit spending, when you take into consideration that a 4% tax deduction for the wealthiest Americans resulted in lost tax revenues of over $300 Billion per year.

d.)  That’s it.  $380 Billion in Federal Budget cuts, a tax increase on wealth wages and Capital Gains, and reducing SS payments over time would balance our budget in one year and keep Social Security solvent indefinitely.  You may think this is pie-in-the-sky idealism, but the numbers work, and more than that, such an undertaking would help reduce American stress during this recession, paving the way for a quicker recovery for everyone.  I can’t stress the importance of the national psyche in this recession.  Simply put, most Americans believe we are headed toward a total collapse.  One poll recently cited 70% of Americans as believing this.  Recovery isn’t likely so long as our confidence is at such a low state.  Both FDR and Ronald Reagan understood the effects of confidence on economics.  As a result, their efforts were based more on consoling and encouraging Americans than any “program” or stimulus.  This President needs to learn that lesson quickly, or he’ll be done after one term, and so will America.

How do we pay down the National debt?

a.) The first step is policy change in the way we give aid, both financially and militarily.  No more free rides without absolute necessity.  No matter what side you come down on with the Iraq war, we weren’t paid by anyone for our efforts.  Furthermore, we dumped Billions more into rebuilding Iraq.  I’m all for helping oppressed people achieve freedom.  But when that people has the means to pay for our help, we should at the least be able to expect some PLAN of repayment, which the Bush Administration completely forgot about.  That war has cost us over $2 Trillion, and we won’t see a penny of it back.  That’s debt we have to pay interest on.  From this point on, if a nation needs our military, there MUST be some agreement as to how it will be funded, especially when the United Nations calls for action from our military.  Americans shouldn’t have to foot the bill for every police action in the world.  Use the money our military earns to pay down the debt.  And if our military is no longer asked for aid, reduce the size of it to reduce the budget.

b.)  All TARP money MUST be used to pay down the debt.  Not doing so means we increase the debt, AND pay interest on money that was supposed to be a short-term loan.  This is a no-brainer, and any politician who doesn’t get it should be voted out of office.  That includes you, Mr. President.  Stimulus money is nefarious at best, when it turns out that a good percentage of it went to special interest groups as a means of paying back campaign donations.  Our nation sits at 17% underemployment, with one in five American Males out of work completely.  In case you can’t do math, that’s twenty percent.  I know the Democrats like to say the stimulus is working, but the twenty percent of males out of work says it isn’t.  There are five American males for every one job available in this economy.  How well is that stimulus working again?

c.) Stop for all time the idiotic talk that budget deficits are good for the economy, that budget deficits allow us to grow the economy or create jobs.  Our deficit is a record deficit, and we are setting modern-day records for unemployment as well.  The deficit is attacking the national psyche, and no amount of stimulus spending can cure that.  Despite what our smartest economists are telling us, to the normal American and to the small business owner, deficit spending means big trouble.  So long as our small business owners believe our economy is headed for disaster, stimulus spending will be a waste.  We have to address the national psyche, give Americans signs that tell them our system works, that our government is reducing the deficit and fixing problems that have been with us for decades.  Give Americans just one or two signs that REAL financial reform and budget restraint will occur and our economy will recover.  That’s what Americans are looking for.  They aren’t looking for handouts, or for miracles.  They are looking for a reason to believe in themselves again.  Stimulus spending and unemployment checks can’t touch that.

d.)  No more Federal Bailouts of private industry.  If banks need to be made smaller to make sure of that, then so be it.  If Capitalism is to work for everyone, then the same rules have to apply to everyone, or normal Americans will lose faith in the system, as we are seeing already.  One and a half years ago, we bailed out Wall Street which toppled our economy, caused massive unemployment, and a two-year recession.  The excuse we were given for the bailout was to avoid an economic collapse.  I’ve got news for all of our elected officials:  OUR ECONOMY COLLAPSED ANYWAY. You can’t describe our economic condition in any other way.  Again, one in five American males is jobless.  Every American who had a retirement account invested in Wall Street lost more than fifty percent of their savings, and two years worth of investing.  Real wages dropped, millions lost their homes in foreclosure and many more became homeless.  I don’t know what criteria our elected officials base an “economic collapse” on, but I’d say we collapsed a long time ago, and gave favorable loans to businesses that caused it so they could stay in business.  In the Business world, every investor would call that a dumb move.

No more.  If you are a large bank or manufacturer, and you fuck up, you go out of business, like the rest of us.  That’s Capitalism.  Deal with it.  Because of Wall Street greed and bad banker debts, we blew through $200 Billion to Fannie Mae and Freddie Mac.  Those two institutions should have been allowed to fail.  Because they weren’t, we are still stuck with them, and they are still largely unregulated and making the same stupid bets they made before the collapse.  It’s insanity.

e.)  Link Congressional and Senate pay raises to a balanced budget.  Enough said.

There is more that we can do, and we can always revisit the idea of tax cuts when we are back on our feet and with a balanced budget and zero debt.  But for the time being, we have to bite the bullet and make it work.  If we do not, kiss the American dream goodbye.